Business & Investment

Market Trends: Open interest in equity futures has fallen sharply, indicating a downturn

After a significant budget and RBI interest rate setting meeting, the market was opened with the rest of the firepower, but slowed and consolidated for most of the week. Nonetheless, the Nifty 50 hit a high of 15,257 for the first time in history. Nifty It took about 18 years to reach 7,000 points, but the next 8,000 points were only 7 points. This shows the invasion of the influx into Daral Street and the progress of our economy, building confidence among FPIs to continue investing in India.

After the September pandemic, FPI has been a net buyer of stocks in India since May, even if DII is a net seller. Even in the first two weeks of February, FPI continued to invest while the DII was on sale.

With a strange development Open interest With many large caps Stock futures It has almost halved from its peak in October-November 2020. This shows that traders are refraining from keeping their positions open and do not want to commit at such a higher level. Therefore, neither bulls nor bears seem to tend to take the lead in this market, which represents a downturn in the future.

In addition, SIP inflows in January fell by nearly 5% month-on-month, but equity investment trusts have been outflowing for the seventh straight month. This ongoing outflow from equity funds may be due to higher levels of personal profitability. It will be interesting to observe when this anomaly in the flow of mutual funds ceases and domestic investors choose the mutual fund route again and are exposed to the equity market.

This week’s event

Brent crude has been a hot topic after a great start of the week, which hit a high of $ 60 a barrel almost a year later. It is on the rise, rising by more than 50% in just three months. This significant increase is largely due to Saudi Arabia’s commitment to deeper production cuts and the slowdown of viral infections in the cold and vaccine deployments, renewing optimism about fuel consumption. However, India is a crude oil importer, and the import price is increasing, and the prices of gasoline and light oil are skyrocketing. As an importer, if oil continues to rise at the same rate, the trade deficit will increase significantly and the rupee could be under pressure.

Technical outlook

The Nifty50 ended the week with flat notes and traded in a narrow range. The market has witnessed a short tug of war between the bulls and the bears. The latter lowered the index to the 14,970 level, where it could not be maintained. The market is overbought in the short term and is trading with accelerated channel resistance. As a result, the bulls are tired and lack the demand needed to push prices up.

Similar slowdowns can be seen in many sectoral indexes such as banks and pharmaceuticals, as well as global indexes such as the S & P 500. The market is currently limited to within immediate support and resistance at levels 14,970 and 15,250, respectively, and breaches on either side will determine trends in the coming weeks.

Expectations for this week

The market is discounting all major events, so consolidation could be slow last week and short fixes could be made. Corporate profits reached the final stage in the December quarter, as the majority of top companies have already announced their numbers. Overall, the earnings quarter turned out to be a bullish quarter for Daral Street, as cost savings pushed up PAT and the recovery in demand after the opening of the economy helped the top line. Investors need to maintain a dip-by-by strategy, although in the short term there may be a battle for influence between bullish and bearish.

Nifty rose 1.6% to end the week at 15,163.

Market Trends: Open interest in equity futures has fallen sharply, indicating a downturn Market Trends: Open interest in equity futures has fallen sharply, indicating a downturn

Back to top button